Last Updated on Thursday, 07 April 2011 13:00 Written by Seymour Wednesday, 04 August 2010 09:49
Many times my client is surprised when I tell him/her that their claim for injuries is considered anasset, and it has to be reported to the bankruptcy court. Sometimes they think that whatever moneythey receive will have to be paid to their creditors.
The truth is that the bankruptcy laws are pretty liberal as far as how much money you can get from the accident settlement before you have to pay any of your bills.
Keep in mind that when you settle your accident claim, you will normally be paying attorney fees, court cost, and other expenses. Therefore, you might settle your accident case for a gross sum of $40,000 but when all is said and done you might only receive $25,000 in your pocket.
The question is how much money can you receive from your accident claim and still wipe out your unsecured debt.
Under the federal bankruptcy law, you are allowed to net $21,625 in your pocket from your personal injury settlement. In addition, you can also take an additional $12,675 on top of that if you don’t own real estate or don’t use any other exemptions as permitted by law.
Therefore, under the best circumstances, you could net $34,200 in your pocket from a personal injury settlement without having to pay your creditors.
The law may differ in states that do not precisely follow the federal exemption law. Different states may have different amounts that are permitted to be kept from an accident case, because not all states follow the federal exemption laws of the Bankruptcy Act. Therefore, if you do have an injury from an accident, and you are filing bankruptcy, make sure to tell your personal injury attorney and your bankruptcy attorney so that everything can be handled property, and you can get all money that you are entitled to receive. It is good to check with an attorney who is familiar with bankruptcy law in your state.
The important point here is that you can keep a fairly large amount of money from injuries sustained in an accident, and still wipe out your bills in a bankruptcy case. The exact amount that you can keep before having to pay some of your bills depends on what state you are in and the exact circumstance of your case.